Terrific news for Chick-Fil-A; Barack and Michelle Obama believe that restaurants are the key to our economic recovery! Last Friday in Springfield, Massachusetts, Michelle said:
So I want you to remind folks that Barack has cut taxes for working families by $3,600, and he has cut taxes for small businesses 18 times--18 times. Because what your president understands is that building our economy starts with the restaurants and the stores and the startups that create two-thirds of all new jobs in this economy. That’s what we need you to do.
New jobs? On Friday, the Bureau of Labor Statistics reported that the national unemployment rate was 8.3 percent last month, which was the 42nd straight month (not coincidentally, the exact length of Obama’s term) that the national unemployment rate has been above 8%.
Cut taxes 18 times? When this is documented fully, it becomes clear that these are not tax cuts but tax credits.
As Gary Howie puts it so cogently,
Undoubtedly these tax credits can each be quite helpful—IF you have a small business that is not dependent upon getting existing loans renewed and/or has great cash flow. In other words, if your business doesn’t really need help, the government is right there with some additional perks. But, if your business is like most and is subject to renewable loans, the only way to get those loans renewed is (courtesy of the Dodd-Frank Act) to absolutely minimize spending and investment so that the cash flow to expense ratio remains high and you pass the scrutiny of the many new bank regulators. For most small business owners these tax credits are meaningless.
The day before, in Leesburg, Va., President Obama had offered the same theme vis-a-vis restaurants:
But if you look at our history, if you look at the facts, every time we’ve grown, it hasn’t been by the top down. It’s been from the middle out. It’s been from the bottom out. When middle-class families are doing well, lo and behold, everybody does well. If that construction worker has got a little extra money in his pocket, he goes and spends it maybe on a new car. When we’ve got new teachers doing great work with our kids, then you know what, they go to a restaurant and spend that money. And so suddenly businesses are doing well, the economy is doing well, and we get into a virtuous cycle. And we go up.
When the Obamas speak of growing from the middle out in the same breath as going out to restaurants, it’s hard not to think of Michelle, but the truth is that they throw figures out fast and loose. As Thomas Sowell has written, when Obama speaks of lowering taxes, he’s lying; he’s really talking about whether to continue the existing tax rates or raise them. And he and his restaurant-crazy wife attack tax cuts for the most wealthy by assuming there is a correlation between tax rates and tax revenues, which simply isn’t true.
For nearly 100 years, cutting taxes for everyone, not just the middle and lower classes, has led to more money for the federal government, because wealthy investors took their money out of tax shelters and put it back into the economy, where they could earn more because taxes were down. Even the New York Times admitted this; in 2006, the Times reported: “An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.”
In 2008, when Obama ran for president, Charles Gibson of ABC News asked him if he agreed that there was no automatic correlation between the vicissitudes of tax rates and whether tax revenues moved up or down. Obama agreed, but then said he wanted to raise tax rates on higher-income earners anyway, in the name of “fairness.”
In the interest of fairness, supporting restaurants, and eschewing bullying, the logical path for the Obamas to take would be to eat at Chick-Fil-A every single day. Even if it’s just Michelle, the economy could get quite a boost.